Our Finance Minister, Arun Jaitley’s Budget 2016 has key measures which doesnt leave much in our hands, but takes away a bit. For those earning a lot have to pay little more in taxes directly and indirectly.

For your Savings and Income

1. The tax rebate ceiling under Section 87A increased from Rs 2000 to Rs 5000 for those whose income is not more than Rs 5 lakh.

Note: We had erroneously mentioned that the taxable income upto Rs 5 lakh will be exempt, which is not the case.

Impact on your wallet: If your total taxable income is not more than Rs 5 lakh, the amount of tax you pay will be reduced by Rs 5000, this figure being up from Rs 2000.

2. Good news for those living on rent: Under section 80GG, if you live in a rented house, and don’t even get a house rent allowance from your employer, you would be eligible for a rent exemption of upto Rs 24000 a year. This limit has now gone up to Rs 60000 a year.

Impact on your wallet: While this exemption applies for all, working women especially in metros cities, who satisfy the criteria shouldn’t forget about taking benefits of Section 80GG while filing tax returns.

3. Work harder a happy retired life: The withdrawals under the government’s national pension scheme (NPS) was subject to tax on retirement (40% corpus allowed to be withdrawn and income tax was levied on this 40% amount). This tax has been exempted. At the same time, the 40% of the withdrawals from other retirement contribution schemes like employee provident fund (EPF) will come under tax purview. Until now, full withdrawals from these schemes at maturity, was completely exempt from tax.

Impact on your wallet: Work harder and invest harder towards retirement pool as the 40% of the accumulated corpus will now be taxed as per the income tax slab you fall into at the time of retirement.

4. Pay more if you earn more: If your taxable income is above Rs 1 crore, the surcharge you pay has gone up from 12% to 15%

5. Get more exemption if buying house for first time: If you ar buying a house worth Rs 50 lakh for first time, and a housing loan of not more than Rs 35 lakh, you get an additional Rs 50000 deduction, in addition to Rs 1 lakh allowed for first time house buyers.

B.For your Spending

1. It will be more expensive to own and maintain big cars as pollution cess of 1% will be levied. An extra excisy duty on vehicles

2. Services to become expensive as a levy of 0.5% Krishi Kalyan cess will increase the service tax to 15%

About Rachna Monga Koppikar

Rachna aka your Great Gruhini is a finance writer with over a decade's experience in writing about personal finance matters with leading financial publications of India. As she studies to be a certified financial planner, she is also on a mission to make every woman a money savvy individual.
So shed your inhibitions. Get over your money worries with The Great Gruhini. Write to her at thegreatgruhini@gmail.com